Increase In Capex By Cimarex Energy To Boost Its Production

Analysts at Dahlman Rose reiterate their "buy" rating on Cimarex Energy Inc

. The target price for XEC is set to $85. According to Dahlman Rose, “High return wells in the Permian Basin encouraged CImarex to increase its 2010 CAPEX budget range to $900MM-$1Bn from a prior range of $700-$900MM. We estimated a CAPEX increase when Cimarex added 5 rigs in the Permian last week, bringing its Permian rig count to 12. This increase in activity pushes its 2010 production forecast range to 585-605MMcfepd from a prior range of 570-595MMcfepd. Last week, Cimarex disclosed impressive 30-day rates from recent Bone Spring and Abo wells. Two Abo wells produced an average of 590 and 875 boepd, and two Bone Spring wells produced an average of 970 and 1,100 boepd.” “Cimarex and Devon both commented on down-spacing potential in the Cana shale after successful testing on 80- and 64-acre spacing. Currently, Cimarex is drilling 1 well per sq. mi. (640 acres). Recent results from the down-spacing tests have proved encouraging. The company awaits further analysis of micro-seismic data and longer-term well performance before altering its developing plan,” the analysts say.